Lester Levy: "My focus is on making sure we get the best value for patients from the significant investment made by the public in our health system." Photo / Tyler Olson, Simplefoto
Lester Levy: "My focus is on making sure we get the best value for patients from the significant investment made by the public in our health system." Photo / Tyler Olson, Simplefoto
Professor Lester Levy is the commissioner of Health NZ. He has more than 30 years of high-level governance and management experience across the public and private healthcare systems in New Zealand.
OPINION
Healthy dialogue is critical for understanding and improving our health system.
There are many different and even conflicting opinions, perspectives and narratives about the state of our health system and what needs to happen.
However, we do need a common set of accurate facts to inform the dialogue about the way forward to ensure we consider the most relevant issues in order to develop effective and sustainable solutions.
An editorial published last week in the New Zealand Medical Journal (NZMJ) concluded Health New Zealand Te Whatu Ora’s Vote Health operational budget did not increase by 6.2% this year but rather only grew by 0.4%.
This editorial led to an article in the NZ Herald suggesting because of this, Health NZ would not be able to find the $1.4 billion in cost savings it needs to get back to budget, without impacting frontline services.
However, the analysis in the NZMJ editorial does not reflect an accurate position of the funding increase provided to Health NZ this year through the Government’s 2024 Budget. I would like to clarify the actual circumstances of the funding increase as they are pivotal to a coherent dialogue about the current state of the health system.
Health NZ’s cost pressure funding increase for this year is in fact $1.43b across the three core budget appropriations of Hospital and Specialist Services; Primary, Community, Public and Population Health Services; and Hauora Māori Services.
This funding increase is a 6.2% uplift on Health NZ’s core budget compared with Treasury’s consumer price index inflation forecast of 2.2% for the year. The 6.2% cost pressure uplift includes funding for wage and price increases including inflation.
The total operating funding increase approved through the Government’s 2024 Budget was $1.51b, made up of the $1.43b across the three core budget appropriations as well as $66m for continued pandemic preparedness and $19.7 million for other Government initiatives.
On top of this and subsequent to the 2024 Government Budget, another $38m was added to fund the delivery of the extra cancer medicines. It is worth noting the actual funding uplift of $1.514b this financial year excludes the range of new medications which are funded over and above the $1.514b.
It is important to note capital funding is derived from the separate total health capital envelope, which is spread over several years for multi-year large capital projects, and there is separate funding for the remediation of the Holidays Act Liability.
The analysis in the NZMJ editorial represents these two significant categories of expenditure completely incorrectly, leading to their conclusion that the funding increase for this year is 0.4% or $93m, which is simply so wrong as to be meaningless.
Using this data as a basis for determining whether the funding for this financial year is adequate or not is pointless as the actual increase is 15.5 times that.
Professor Lester Levy is the newly appointed Health NZ commissioner after the Government sacked the previous board. Photo / Alex Burton
The editorial has a strong emphasis on the requirement for more funding for our health system.
Happily, Health NZ has received more funding this year as part of a confirmed three-year funding uplift.
There is more funding for health, significantly more, so I guess the editorial is implying there should be even more funding. This would be a very questionable approach, as the relationship between increased healthcare spend and the level of value derived has been subject to careful examination, with no direct or consistent correlation found.
This has, in fact, played out in New Zealand in recent years, where health funding increases have not led to anywhere near commensurate value in terms of public benefit.
Value in this context is expressed as patients’ access to care, the quality of that care and the health outcomes achieved - which is a more constructive way of thinking about enhancing the value the health system generates before reflexively providing even more funding. This, of course, does not preclude health system funding increases where they are clearly required; rather, it challenges the principle that they are the only and inevitable option.
In this context, it is always worth remembering the social determinants of healthcare are also of critical importance and governments need to consider the overall symmetry of their spend, not only their spend on the healthcare system itself.
Placing the spotlight on value is helpful as it highlights the potential health gains of shifting the emphasis from being on health spend only to doing more with the resources already within the system. The health sector has only a very modest record of productivity gains, and consequently there is considerable potential to lift productivity within the current system, not by working harder but by working differently.
Evidence from the OECD reveals up to 20% of health expenditure could be directed to more effective use and thereby better health outcomes, and therefore a value-based approach to healthcare has the potential to seize greater control over the cost curve into the future.
My focus is on making sure we get the best value for patients from the significant investment made by the public in our health system, and that includes faster, safer access for patients and more rewarding experiences for our staff.
We are already getting more funding for Health NZ - we now need to make sure we also get more value.
